Publisher Houghton to keep trade group

Firm rejects offers, says it can grow historic division

Boston educational publisher Houghton Mifflin Harcourt yesterday said it has decided not to sell its trade and reference group, the division that publishes consumer books from Curious George to Phillip Roth novels to the Peterson Field Guides to birds.

Houghton Mifflin had been exploring a sale of the unit since December, when it fielded an unsolicited offer. It has since received three formal and several informal offers, said Tony Lucki, the publisher's chairman and chief executive. The group accounts for 5 percent of Houghton Mifflin's profit and less than 10 percent of its sales, but it is important to the history and heritage of the company.

"Even though the offers were relatively attractive, we felt they weren't giving us the kind of value we could deliver in the foreseeable future by growing the business ourselves," Lucki said. He said the company explored a sale out of a duty to its shareholders.

The trade and reference group was Houghton Mifflin's original business, and it has published novels, dictionaries, and other consumer books since 1832. Among the authors it has published are Henry Wadsworth Longfellow, Ralph Wal do Emerson, Henry David Thoreau, Harriet Beecher Stowe, and Mark Twain.

About 125 employees work for the division in New York and Boston out of a total Houghton Mifflin workforce of about 4,000. The publisher makes most of its money from K-12 educational textbooks and related materials, which make up about 90 percent of its revenue. Lucki said he expected President Obama's stimulus plan to help sales in coming months, as money trickles down to hard-pressed school districts.

"We're fairly confident Mr. Obama will throw some money our way," Lucki said. "We will definitely get a good chunk of the stimulus."

Like other educational publishers, Houghton Mifflin has been hurt by slumping textbook sales from school districts facing budget cuts. Its future has also been clouded by the financial problems of its corporate parent, Education Media & Publishing Group. Credit rating agencies Moody's Investor Services and Standard & Poor's slashed that company's ratings in January and warned it could default on $6.7 billion in debt.

Lucki said Houghton Mifflin would resume acquiring manuscripts aggressively for the trade and reference group. He said he had asked managers to slow down acquisition when the company was exploring a sale of the division. Though he acknowledged the bookselling business is slow, Lucki said the publisher wanted to be properly stocked with manuscripts when the economy turns.

"We're optimistic that things are going to pick up, and we can't just sit around on our hands," Lucki said.

Robert Weisman can be reached at weisman@globe.com.